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Section 78: Distribution of compensation

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter VII: Employee's Compensation
Competent Labour Forum
Act No. 36 of 2020
Section 77 All 163 Sections of Code on Social Security, 2020 Section 79

Legal Commentary & Landmark Judgments: Section 78

Section 78 of the Code regulates the distribution of compensation in respect of an employee whose injury has resulted in death, prohibiting direct payments to dependants and mandating deposit with the Competent Authority.

  • Mandatory Deposit with Competent Authority: Strictly prohibits employers from making direct compensation payments to dependants of deceased workers; declares that any direct payment shall not be deemed a discharge of liability.
  • Sole Jurisdiction of Authority to Apportion: Vests exclusive judicial authority in the Competent Authority to apportion the deposited compensation among legitimate dependants according to their degree of dependency.
  • Protection Against Unscrupulous Intermediaries: Requires the Authority to invest shares allocated to minors and persons with disabilities in government securities or scheduled banks, preventing fund exploitation.
Key Landmark Precedents:
  • K. Sivaraman v. P. Sathishkumar (2020) 4 SCC 594: Supreme Court affirmed that mandatory deposit with the Commissioner is a non-negotiable statutory rule protecting vulnerable surviving dependants from exploitation.
  • National Insurance Co. Ltd. v. Hamida Khatun (2009) 13 SCC 710: Supreme Court held that direct settlements made outside the statutory authority do not discharge the employer or insurance company from statutory compensation obligations.
  • Oriental Insurance Co. Ltd. v. Siby George (2012) 12 SCC 540: Affirmed that the statutory distribution framework guarantees equitable support to minor and female dependants.
Courtroom Practice & Strategic Litigation Guidance:

Never pay fatal accident compensation directly to relatives, union representatives, or contractors at the plant gate. Always deposit the computed compensation directly with the Competent Authority via treasury challan under Section 78 to secure a valid statutory release.

Section 77 All 163 Sections of Code on Social Security, 2020 Section 79